India lockdown

Ammar Master, Senior Manager, Asia Pacific Vehicle Forecasts

17 June 2020

It’s about saving lives

“My existence, while grotesque and incomprehensible to you, saves lives”, a bellicose Colonel Nathan R Jessup bellowed in A Few Good Men.

India’s Prime Minister Narendra Modi is not a military man, but his government’s officials have stressed that imposing the world’s strictest lockdown policy, which kept the majority of 1.4 billion Indians behind closed doors for more than two months, saved lives. It is impossible to know exactly how many deaths were prevented, but officials have cited independent estimates that put the figure between 50,000 and 200,000.

Criticism of the government has gathered steam of late as the stringent measures have devastated the economy and left millions jobless, all while the number of coronavirus infections and deaths rose steadily during the quarantine period.

From early June, however, the buzzword has morphed from ‘lockdown’ to ‘unlock’ as India unleashes a three-phased strategy to exit the lockdown.

Government authorities have announced both monetary and fiscal measures to revive the economy, which was already sputtering even before COVID-19 arrived on Indian shores. But the interest rate cuts by the central bank have done little to encourage demand. And while the government’s stimulus package promises structural reforms that may boost economic competitiveness in the medium and long term, tangible relief measures to incentivise demand in the immediate term are thin on the ground.

Against such a dire backdrop, it comes as little surprise that India’s Light Vehicle market has suffered immensely. Indeed, it is the worst affected amongst the world’s leading automotive markets and is set to lose its position in the global automotive landscape, as we outlined last month

The difference between our December 2019 forecast, prior to the pandemic, and our current outlook for this year shows a stark 49% decline in India’s Light Vehicle market. This is not far off the downgrade for the Brazilian market, but far exceeds the declines anticipated in China, the US, Japan and Germany.

And the market recovery in India over the next five years is likely to be far slower than in the other automotive powerhouses. Our outlook for the market has been slashed by around 30-40% from our estimate last December, compared to a cut of just 3-5% for China. The US, Japan and Germany, meanwhile, are unlikely to suffer any major long-term impact from the pandemic.

While Indian lives were undoubtedly saved by the lockdown policy, many livelihoods may well have been shattered in the process.